Health Insurance as a Barrier to Providing Care
Megan Oberle
Dr. Beth Pritts
Dr. Susan Holsapple
Integral Honors Thesis
March 30, 2007
Table of Contents
Thesis Abstract 3
The Tip of the Ice Burg:
The Necessity of Health Insurance and its Effects on Health Care 3
The Path of the Health Insurance System in the United States 5
The Middle Man between Receiving and Providing Care 8
The Connection of Employment to Health Insurance 10
The Face of the Uninsured 12
The Effects of Being Uninsured 13
Health Insurance Policies Limit Health Care 17
Health Insurance as Interference to Providing Care
My Research: Introduction 19
Methods and Materials 21
Results 26
Discussion 34
Conclusion: Health Insurance is a Barrier to Providing Care 47
Acknowledgements 50
Appendix 1: Cover Letter 51
Appendix 2: Adult Informed Consent 52
Appendix 3: Insurance as Interference to Providing HealthcareSurvey 53
References 56
Health Insurance as a Barrier to Providing Care
Thesis Abstract
Studies have concluded that some insurance patients receive limited coverage and have difficulty obtaining necessary health care, particularly preventive treatment.[1] In addition, research indicated that uninsured patients are in poorer health and are more likely not to receive necessary healthcare.[2] I examined the delivery of healthcare from physicians’ perspectives in terms of health insurance status and the possible interference with physician decision making. One hundred private primary care physicians were surveyed to determine ways in which health insurance status and policies interfere with physicians’ care of their patients in and around Syracuse, New York.
The Tip of the Ice Burg:
The Necessity of Health Insurance and its Effects on Health Care
It is recommended that students who plan to become physicians spend some time observing at a health office or hospital. Shadowing a professional in your future career allows you to see what being a physician entails. In the summer of 2004, I took this advice and volunteered at the pediatric emergency room at Hillcrest Hospital in Mayfield, Ohio. Once a week, I shadowed the physicians who worked there as well as transported patients and gave them popsicles and snacks. I have wanted to be a physician since I was eleven, so this experience gave me a chance to see if a career as in medicine was really what I wanted. By observing the emergency room physicians, I learned about bedside manners and the importance of the patient-physician relationship. One of the main aspects of a career in health care I learned that summer was the important role of health insurance in treatment plans, including types of procedures and medications prescribed.
One day a boy around the age of ten years old came into the emergency room with an obviously broken arm. When the doctor I was observing told the boy and his mother that an x-ray was required, the boy immediately protested. He knew an x-ray would cost money and that his family did not have health insurance. I was shocked that a young child knew about health insurance and was worried about the cost of a diagnostic procedure he needed. The event brought about the realization that when I am a doctor, health insurance, or the lack thereof, will be a constant issue while treating patients.
The health insurance system in the United States has been a source of continuous debate. The high cost of health care makes insurance necessary to afford health care; this often deprives people of health care. With 46.6 million uninsured Americans in 2005, it can be easily imagined that there are many cases of patients not receiving care because of unaffordable and inaccessible health care.[3] Those who cannot afford health insurance premiums will most likely not be able to afford treatment when needed. Some hospitals or clinics may not have the required equipment to provide certain services or patients may require a doctor in a specialty who does not have an office in the area, making health care inaccessible.
In contrast, the health insurance system of the United States also provides situations of excess and unnecessary care. Insurance companies often require physicians to follow a set of procedures before allowing the physician to send the patient for diagnostic procedure or a consult; several excessive diagnostic procedures may be done before the physician can provide the care that was initially needed.[4] The patient’s money and time is wasted as well as the resources of the health care provider and system. Health insurance procedures in the United States have created this paradox of excess and deprivation. The necessity of health insurance in this country causes many people to be deprived of health care. However, some patients receive too much health care such as multiple unnecessary diagnostic procedures required by health insurance policies.
The health insurance system plays an important role in access to the health care system in the United States. Health insurance can either increase or decrease patients’ accessibility to healthcare. The objective of my research was to determine how insurance status and policies influence physicians’ decision making. By investigating the health care and health insurance system in the United States, as well as surveying one hundred private primary care physicians in the Syracuse area, I determined that the health insurance system in this country provides barrier which physicians must work around in order to treat their patients. Health insurance policies are a source of interference in the physician-patient relationship.
The Path of the Health Insurance System in the United States
The development of the health insurance system was a product of rising health care costs. Simply paying the health care provider for services out-of-pocket was no longer an option, especially during the Great Depression. The origin of health insurance can be traced to Texas in the 1920s. Railroad and mining companies provided insurance to attract employees and also physicians to the area.[5] The healthcare of the workforce was provided for while the physicians had a stable steady income which did not depend on the financial status of the patient.
This concept that incomes of medical care providers should not depend on the financial situations of their patients became part of Justin Ford Kimball’s plan for health insurance in 1929. This hospital administrator at Baylor University Hospital devised the idea of collecting “insurance premiums” biweekly in advance, “guaranteeing the hospital’s services to members of groups subscribing to this arrangement.”[6] For fifty cents every two weeks, participants were provided with more accessible and affordable services, such as a certain number of days in the hospital and selected lab tests. Kimball’s system proved to be necessary during the years of the Great Depression as “an increasing proportion of hospital beds stood empty and an increasing number of bills went unpaid.”[7] The health insurance premium concept which started in Baylor University Hospital expanded. Subscribers to a certain plan were no longer tied to one particular hospital, but could select any hospital. Not-for-profit associations such as Blue Cross emerged that were hospital association-sponsored not-for-profit plans and served the entire community. Serving the entire community meant that a standard premium would be charged according to the average risk and hospital costs of a community. Therefore, low risk subscribers would carry the cost for the high risk subscribers.[8] This system allowed those of high risk to afford medical care. Without part of their medical costs being supported by the payment of a standard premium of the low risk subscribers, premiums and consequently health care would most likely be unaffordable for high risk subscribers. While Blue Cross provided hospital service benefits, Blue Shield provided for physician services in which fee-for service was the main method of payment.[9] Fee-for service can be translated as a fixed payment per procedure.[10] However, every patient is different, therefore making every procedure unique to that the patient’s specific case. Alternatives to the fixed payment per procedure method were soon developed.
The major alternative for the fixed payment method was the establishment of health insurance premiums. This was an arrangement that all health services provided to subscribers would be covered under a prepaid, predetermined monthly amount. There are two models for this method: the staff model involving an employed salaried physician, and the group model involving a group of physicians contracted for services for a predetermined sum.[11] Private group practices (PGPs) were helpful to the patient because this method provided subscribers with a variety of physicians and services. The participating physicians were also assured reimbursement as well as patients. Most PGPs were linked to employment; “because the most common group arrangement and linkage involved employment, this pattern had many administrative and enrollment advantages, especially during the Second World War when America bounced back from the depths of the Depression.”[12] As employment rates continued to rise, an employment-based health insurance system seemed like the solution to universal health care in the United States. If everyone able to work did so with an employer who provided health insurance, the employee and his or her family would be covered. The rapid growth of health insurance in the forms of Blue Cross and Blue Shield and PGPs led to the belief that health care coverage would be made available for everyone in the U.S. [13] This, however, is obviously not the outcome of the expansion of the health insurance system. The growth put more pressure on those who did not have health insurance: mainly those retired, unemployed, self-employed, or with low-wages. The growth of the health insurance system also created a barrier between the patient and the physician.
The Middle Man between Receiving and Providing Care
The health care system in the United States is a complex relationship between the healthcare provider and the receiver. In its simplest form, the patient receives care from a physician and the physician is reimbursed for his or her services by the patient. However with the high cost of health care, this scenario is often not the case. In the United States, there are four main methods of payment: out-of-pocket, individual private insurance, employment-based private insurance, and government financing, such as Medicaid and Medicare.[14] The out-of-pocket method of payment is described as the simplest form of the four above methods, but because of unpredictability of medical treatment outcomes, and the economy and the increased cost of health care, this form of payment is no longer feasible for physician services and medical procedures. With the implementation of the health insurance system, patients no longer had to have money readily available to obtain healthcare or to pay the entire cost for medical procedures and services. The introduction of health insurance was also beneficial to physicians; “coverage in the U.S. was initiated by health care providers seeking steady sources of income.”[15] Physicians no longer had to rely on patients to be reimbursed for their services. The health insurance provider would pay the physician provider regardless of the patient’s economic situation. This offered financial stability to the heath care provider as well as the health care receiver.
The health insurance provider acts as “the middle man” between the receivers and providers of healthcare. In the case of the individual private insurance method of payment, two transactions are involved: a premium payment to the insurance provider from the patient and the reimbursement of the health care provider from the insurance plan provider.[16] The patient pays a certain amount of money, usually monthly, to the insurance plan provider. When medical services are required, the patient can receive treatment with most or all of the cost of the healthcare covered by the health insurance provider. The health care provider is then paid a percentage of the billed fee or a flat fee for services by the health insurance provider.
Employment-based (or job-based) private insurance plans work in a similar manner as the individual private insurance plan. The health care provider is reimbursed by the insurance provider while the employer pays a portion of the health insurance premium for the individual. Employment-based insurance makes health care even more affordable and more accessible to individuals as compared to the out-of-pocket method of payment. The cost of a health insurance premium is lower because of the partial payment by the employer. Employers also benefit from providing health insurance for their employees. Employers receive tax deductions for partially covering health insurance plan premiums.[17] Additionally, offering health insurance coverage is a way to attract employees.
The Connection of Employment to Health Insurance
The first subscriber to the Baylor University Hospital’s health insurance premium system was the Dallas School District, which enrolled its teachers. Kimball’s system involved employers, reducing expenses regarding enrollment and marketing.[18] The employment-based health insurance became the most prominent method for paying for health care in the United States. The employer pays a percentage of the health insurance premium for the employee and the employee receives affordable health care. Both the employee and employer benefited for job-based insurance: employees gained affordable health insurance while employers got tax-deductions. In 1999, more than 152 million people obtained health insurance through their employer; this was ninety-three percent of all privately insured Americans.[19] This system has been proven invaluable for those employees whose employers provide insurance benefits. For example, coverage for prescription drugs, outpatient mental health care visits, and adult physicals were more extensive in 1998 than they were in 1977, and since 1977 health care costs have increased.[20] In the past, the procedures and conditions covered have increased as health insurance costs have increased.
Although the establishment of the job-based health insurance system in the United States increased the affordability and accessibility of healthcare, this system of payment is far from perfect. Providing health insurance to employees is not mandatory. As health care costs continue to increase, employers are covering a decreasing amount of the premium or not offering health insurance to their employees at all. Employees paid 3.5 times more for the health insurance in 1998 in comparison to what employees paid in 1977.[21] From 2004 to 2005, people covered under employment-based health insurance declined from 59.8 percent to 59.5 percent.[22] The types of procedures and services that were covered by the employee-based health insurance have become limited. “In 1998, 34 percent of employees were enrolled in a plan that required mandatory generic drug substitution. With regards to mental health care services, 65 percent of employees belonged to a health plan that limited the number of allowable office visits for such services.”[23] Important aspects of individual health care such as medications and mental health are being limited by job-based insurance plans. Individual private insurance premiums which may provide more complete coverage for non-generic prescriptions may be unaffordable. It has been predicted that “with the prescription drug costs increasing by 16 percent per year in employer-based plans, and the new technologies constituting a major source of increased health care expenses, more non-price rationing, not less, is likely for the future.”[24] The rationing of health care through medications or procedures will increase with increase cost of health care. The increased cost affects the employment-based insurance plans, limiting coverage for the employee. An increased percentage of the cost also becomes the responsibility of the employee, causing many workers to longer be able to afford employment-based plans.[25]
It is also important to reiterate that it is not mandatory for the employer to provide job-based insurance for employees. The employer voluntarily decides to provide a partial coverage for employees. The high cost of health insurance has made coverage unaffordable for many businesses.[26] Recently the work force has shifted toward more low-wage, increasingly part-time, non-unionized service and clerical workers whose employers are less likely to provide insurance.[27] These types of jobs often do not provide wages which make affording individual private insurance plans possible. It is logical to conclude that the easiest way to get health insurance in the United States is through job-based insurance plans, but there are plans which employees are ineligible or unable to afford. As the rate of those covered by employment-based health insurance decreases, the rate of uninsured in the United States increases.
The Face of the Uninsured